TOWARD A RICHER NORTH AMERICA

CHICAGO TRIBUNE

Critics of the North American Free Trade Agreement regard the treaty as an assault on American jobs and living standards, but they have trouble turning their bogeyman fantasy into a flesh-and-blood threat. Economists who have tried to analyze the likely effect of knocking down barriers between the United States, Mexico and Canada invariably conclude that it's a net gain for all sides.

That is also the conclusion reached by the federal International Trade Commission. The commission's exhaustive 400-page report, published last week, acknowledges that some American workers and industries will be worse off under NAFTA, but leaves no doubt that they will be outnumbered by the winners.

This doesn't count the benefit to the U.S. of having a more prosperous and stable neighbor on our southern border-something that the accord undoubtedly will foster. In fact, the ITC says that of the three countries, the greatest gains will accrue to Mexico.

But to presume that we lose when Mexico wins is to misunderstand international trade, which allows everyone to profit simultaneously. An illustration of this phenomenon is that the agency predicts big increases in our exports and imports of cars and auto parts, computers, textiles and ceramic tile.

Mexico stands to reap the biggest windfall partly because its trade with the U.S. is such an outsized share of its economy, accounting for two-thirds of its foreign trade. The ITC says the accord may eventually enlarge Mexico's annual output by as much as 11 percent. It will also have to make the biggest changes to comply with the accord.

Substantial pain will be felt in some American sectors, including household appliances, flat glass and household glassware. Most agricultural sectors will feel little or no impact. Production of cars is expected to decline slightly, though auto parts production stands to grow considerably.

Other gains should occur in industrial machinery, computers and electronics. Exports to Mexico should grow by anywhere from 5 to 27 percent.

Overall, Americans will undoubtedly come out way ahead. The ITC predicts that total employment and wages will rise slightly as a direct consequence of NAFTA. Total national output is projected to increase over the long run by up to 0.5 percent-which doesn't sound like much until you remember that it amounts to more than $250 billion in today's dollars.

During the presidential campaign, Bill Clinton gave the agreement a lukewarm endorsement, demanding some side agreements on jobs and the environment. He's welcome to pursue those, but his overriding priority should be making sure this opportunity to enrich all of North America doesn't slip away.